Asked By: Wyatt Jackson Date: created: Apr 05 2023

Is Southern Water profitable

Answered By: Albert Gray Date: created: Apr 05 2023

The banking firm that owns Southern Water has recorded a £4bn profit. The Guardian reports that Australia-based Macquarie Bank posted an annual net profit of A$5.18bn (£4bn), up 10 per cent from last year. Analysts were expecting profits of A$4.96bn for the year to 31 March 2023, the newspaper reported.

Macquarie has recently faced criticism, with Southern Water, which it owns, accused of discharging raw sewage into the sea. During the first eight days of November 2022, Southern Water released raw sewage for more than 3,700 hours at 83 bathing water beaches. Excess sewage tanks have been installed at Woolston Wastewater Treatment Works in a bid to combat the problem.

It comes as thousands of households in Southampton have gone without water in three separate outages in recent months. Macquarie also faced political scrutiny during its ownership of Thames Water from 2006 to 2017. The Australian banking company owns an array of assets, including retail and investment banking activities, and infrastructure ownership.

The value of its assets under management has increased by 10 per cent to A$870.8bn, and 71 per cent of its profits were derived from outside Australia. Macquarie’s overall profit was also buoyed by its commodities business, which accounted for 51 per cent of the company’s profit. Top commodity trader Nick O’Kane earned A$58m through a profit-share agreement, surpassing Macquarie’s CEO, Shemara Wikramanayake, who earned A$33m.

The announcement comes as BP and Shell reported robust profits, partly due to improvements in their trading divisions from volatile energy markets.

How much Water does Southern Water lose?

TENS of millions of litres of water are lost by a water company every day due to leaking pipes, new analysis shows. Watch more videos on Shots! Data compiled by National World shows that in 2020/21, an average of 98.5m litres of water leaked each day in Southern Water’s network.

Asked By: Ryan Butler Date: created: Aug 25 2023

Does Macquarie own Southern Water

Answered By: Christian Brooks Date: created: Aug 27 2023

Southern Water owner Macquarie invests further £550m

The Australian infrastructure investor Macquarie has confirmed it will inject a further £550m into the UK’s Southern in an attempt to turn around the troubled company.The funds are intended to help Southern Water, which supplies Kent, Sussex, Hampshire and the Isle of Wight, to overhaul its leaky pipes and faulty sewage works.Macquarie’s investment, which it first indicated it would make last month, extends its ownership of Southern Water, after it,

Martin Bradley, Macquarie’s head of infrastructure in the EMEA region, said: “When we invested in Southern Water in 2021, we said its operational transformation would take time. Whilst the company is making good initial progress, maintaining this momentum depends on significant and sustained investment in its infrastructure.” Macquarie promised in 2021 to put the company “back on a stable footing” after it was fined a record £90m for deliberately off the north Kent and Hampshire coasts.

But last year Southern after discharging raw sewage for more than 3,700 hours at 83 bathing water beaches during the first eight days of November alone. Macquarie’s decision to take a stake in Southern marked a return to the water industry for the investment bank, which had left Thames Water saddled with debt when it sold its stake in 2017.

Macquarie, in which the company paid out billions in dividends but paid next to no corporation tax. Thames Water last month secured £750m of emergency funding from its shareholders and said it would need further funds in the years ahead. It had emerged that officials were,

In August 2021, Macquarie made a £1bn equity injection into Southern, putting more than £500m into the regulated company. It used the remainder to reduce leverage at Southern’s holding companies in a deal that diluted existing shareholders and was closely scrutinised by the water industry regulator, Ofwat.

Ofwat wrote to Macquarie after the investment, stating that “very profound changes” would be required at the company, which supplies water to 2.6 million customers, and provides wastewater services to 4.7 million customers. Bradley said: “Instead of reducing our ambitions in the face of higher cost inflation and interest rates, we are backing Southern Water with additional equity, enabling it to invest circa £1bn more than the funding it received via the regulatory framework for the period.” Bradley said the investment needed for Southern Water to achieve its ambitions would depend on “important decisions by its regulators.

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after newsletter promotion “With rainwater runoff from highways and urban areas into the sewer network causing around 98% of all pollution events in the Southern Water area, we also need a broader conversation on how we progress long-term solutions that relieve pressure on the UK’s legacy storm overflow system,” Bradley added.

  1. This year, Macquarie announced a record annual net profit of A$5.18bn (£2.8bn) for 2022, up 10% on the previous year, thanks in part to its commodity trading interests.
  2. Its top commodity trader, Nick O’Kane, earned A$58m through a profit-share agreement, up from A$36m the year before.
  3. O’Kane’s earnings outstripped even the group’s chief executive, Shemara Wikramanayake, who made A$33m, still putting her ahead of some of Wall Street’s best-paid bankers.

Southern Water’s shareholders have not received dividends from the company since September 2017. : Southern Water owner Macquarie invests further £550m

Asked By: Carter Gray Date: created: Apr 04 2024

How old is Southern Water

Answered By: Isaiah Alexander Date: created: Apr 05 2024

Privatisation – In 1989 the ten publicly owned water and sewerage authorities were privatised. This was achieved by transferring the water supply and sewerage assets, and the relevant staff, of the Southern Water Authority into the limited company Southern Water Services Ltd.

When did Macquarie buy Southern Water?

Macquarie Asset Management commits further £550 million to support Southern Water turnaround plan | Macquarie Group Funds managed by Macquarie Asset Management (“Macquarie”) have agreed to invest an additional £550 million of equity into the Southern Water group.

This additional equity funding will help Southern Water to maintain the momentum of its and manage the impact of a high inflation and interest rate environment on its operating, maintenance and funding costs. It will also enable Southern Water to increase capital investment in its network to £3 billion during this regulatory period (2020-25), equivalent to investing £1,500 per household in the company’s catchment area and representing a 50 per cent increase to the capital investment commitment made upon Macquarie’s acquisition.

Macquarie first invested in Southern Water in September 2021, bringing a £1.1 billion equity injection to facilitate additional investment and reduce leverage across the Southern Water group. Since then, Southern Water has appointed a new executive team and initiated a step-change in investment levels, with a circa 56 per cent increase in average annual capital expenditure.

The company’s Turnaround Plan is focused on ensuring a reliable supply of water for its customers; protecting and improving the health of rivers and seas by building capacity and resilience at its waste-water treatment works and sewer network; making its customer service easy and trusted; and becoming an industry-leader in health and safety.

Southern Water is making good initial progress on matters under its control:

  • Achieved a two-star Environmental Performance Assessment Rating by the Environment Agency for 2022 (compared to a one-star rating in 2021). Southern Water is targeting a three-star rating by 2025;
  • Completed the roll-out of circa 24,000 sensors, providing real-time monitoring of its sewer network;
  • Fitted Event Duration Monitors on circa 99 per cent of its storm overflows. Southern Water is on-track to be at 100 per cent in the coming months, further enhancing its already industry-leading transparency;
  • Continued to improve the operational performance and compliance of its pumping stations and treatment works, reducing serious pollution incidents by 58 per cent in 2022 compared to 2021, from 12 to 5;
  • Maintained water leakage at 17 per cent, compared to the UK industry average of 23 per cent. Part of the additional investment will enable a further increase in mains replacement;
  • Increased the discount on its social tariff to 45 per cent, reducing the average combined household bill from £439 to £241 for 121,000 vulnerable customers. In a challenging cost of living environment, clean drinking water and waste-water treatment services for these vulnerable households has been reduced to 66 pence per day.

As well as improving operational performance to meet its existing regulatory obligations, Southern Water is also focused on additional actions to mitigate the causes of the 98 per cent of pollution incidents that are outside the direct control of the company, which result from rain-water run-off from highways and urban areas and groundwater entering the sewer network.

  1. Southern Water’s Clean Rivers and Seas Task Force is collaborating with community and industry stakeholders to pilot new partnership delivery approaches to address this problem and retain more water in what is a water-stressed region.
  2. If supported by these partners, the initiative could address the challenges posed by climate change, population growth and ageing infrastructure while establishing Southern Water as a leader in tackling key sectoral challenges.

Martin Bradley, Macquarie Asset Management’s Head of Infrastructure in EMEA, said: “When we invested in Southern Water in 2021, we its operational transformation would take time. Whilst the company is making good initial progress, maintaining this momentum depends on significant and sustained investment in its infrastructure.

Instead of reducing our ambitions in the face of higher cost inflation and interest rates, we are backing Southern Water with additional equity, enabling it to invest circa £1 billion more than the funding it received via the regulatory framework for the period. “Securing the ongoing investment needed to achieve the ambitions of Southern Water’s customers and stakeholders will rely on important decisions by its regulators.

With rain-water run-off from highways and urban areas into the sewer network causing around 98 per cent of all pollution events in the Southern Water area, we also need a broader conversation on how we progress long-term solutions that relieve pressure on the UK’s legacy storm overflow system.” Lawrence Gosden, Chief Executive Officer of Southern Water, said: “We would like to thank Macquarie for its continued support, which will enable us to increase investment per household to more than £1,500 this regulatory period and manage the impact of cost inflation and higher funding costs on our business.

  1. Macquarie’s additional investment is a strong vote of confidence in our operational transformation.
  2. It will help us to deliver on our ambitions to customers and position Southern Water well for our upcoming regulatory determination.” Shareholders in the Southern Water group have not received any dividends since September 2017.
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The company does not anticipate making any distributions for the remainder of this regulatory period, reflecting the sustainable financing strategy adopted upon Macquarie investing in 2021. The additional £550 million of equity funding will be provided to the Southern Water group by 31 October 2023, subject to the satisfaction of market standard conditions including mandatory regulatory filings.

  1. Average capital investment in the full years ending March 2022 and March 2023 compared to the year prior to Macquarie’s initial investment (year ending March 2021)
  2. Average annual dual bill for Southern Water customers in the year ending March 2023

: Macquarie Asset Management commits further £550 million to support Southern Water turnaround plan | Macquarie Group

Asked By: Gerld Harris Date: created: Aug 31 2023

Why invest in water companies

Answered By: William Mitchell Date: created: Sep 02 2023

Key Takeaways –

Water is arguably the most important resource on planet earth.Shortages of water can lead to social, political, and economic disruption.Water is increasingly scarce, due to climate change, pollution, and increasing demand.Because of its importance, investors can diversify their portfolios by acquiring water-related assets and investments.There are multiple indexes, mutual funds, and ETFs that allow retail investors to gain exposure to water-related securities.

Asked By: Jack Bailey Date: created: Feb 25 2023

How much is Thames Water in debt

Answered By: Oswald Edwards Date: created: Feb 27 2023

Thames Water secures extra £750m from shareholders to help stave off nationalisation Thames Water has secured £750m of emergency funding from its shareholders but the debt-ridden company warned it would need further funding in the years ahead. The new funds come on top of the £500m investors pumped into Britain’s biggest water company in March.

The company said on Monday it had secured £750m to run to March 2025. It indicated that a further £2.5bn would be needed to cover the five years to 2030 and said shareholders had “acknowledged” further equity support would be needed to turn around the ailing company. Last year, Thames secured an agreement that its shareholders would put £1.5bn into the ailing water firm.

The first cash injection, of £500m, came in March while a further £1bn had been expected this year. It is understood the company believes that £750m is the maximum it can feasibly spend over the next two years with its current resources. Asked about the £250m shortfall on the expected £1bn, Alastair Cochran, the firm’s interim co-chief executive, said it related to “the phasing of when we need the money” and said the figure represented less than two months’ worth of capital expenditure.

  • Thames said the funding was contingent on a new business plan.
  • It is entirely reasonable for them to want to see that plan before committing, albeit they have always followed through in the past,” Cochran said.
  • David Black, the chief executive of the regulator, Ofwat, that investors lacked “appetite” to put more money into the industry, and needed to have confidence in Thames’s turnaround plan.

The regulator’s chair, Iain Coucher, said there were “ongoing conversations about the remaining £1bn and whether that is sufficient”. Cochran and Cathryn Ross, the firm’s other chief executive, said: “This announcement is a major milestone for Thames and all our stakeholders.

The substantial equity support package announced today will underpin the delivery of a more focused turnaround plan that builds on the foundations that have been put in place over the last two years and focuses expenditure on a smaller number of initiatives, which will deliver material and sustainable improvements in key performance metrics over the next three years.” Ross and Cochran said it had been an “extremely challenging” year.

They said record temperatures, a drought and freezing conditions had put “unprecedented pressure” on its network, while high energy and chemical prices had hit its profits. Only 55% of its annual performance commitments were met. “In short, our performance was not as we – or our customers – wanted it to be,” they said.

  1. Thames needs the funding to upgrade its infrastructure after leakage rates hit five-year highs last year and it repeatedly released sewage into rivers.
  2. Thames was last week £3.34m for a “reckless” incident in 2017 in which millions of litres of undiluted sewage was pumped into rivers near Gatwick, killing 1,700 fish.

The Liberal Democrat environment spokesperson, Tim Farron MP, said: “It’s time to rip up Thames Water and reform it from top to bottom. This scandal-ridden firm has put profit first, leading to animals being killed while the Conservatives turn a blind eye.

  • Ministers have been dismissing the sewage crisis for far too long, instead of taking meaningful action they sat on their hands.” Thames said its annual revenues rose by 4% to £2.3bn while underlying profits had fallen by 3% to £1.1bn because of “higher operating costs”.
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For more information see our, We use Google reCaptcha to protect our website and the Google and apply. after newsletter promotion Thames said its ratio debt to capital value, or gearing, had fallen to its lowest level in 10 years at 77.4% from 80.6%, although some companies in the debt-laden industry have ratios about 60%.

  1. The consortium that owns Thames took ownership in 2017 and has not taken a dividend since, but the company has paid internal dividends.
  2. It paid £45.2m in the year to the end of March 2023, up from £37m a year earlier.
  3. The company announced the shock resignation of the former chief executive Sarah Bentley late last month, and hours later it emerged that officials were,

Thames, which serves 15 million customers, has been struggling under a £14bn debt pile as rapidly rising interest rates have pushed up the cost of borrowing. The company spent £476.5m servicing its debts during the year to 31 March. Thames’s largest investor is Ontario Municipal Employees Retirement System (Omers), a Canadian pension fund, alongside the Universities Superannuation Scheme (USS), China Investment Corporation and Abu Dhabi’s Infinity Investments.

  1. Ofwat has faced questions over its scrutiny of Thames, while former owner Macquarie, which sold its final stake in 2017, has been accused of loading the company with debts.
  2. In May, England’s water companies said they would invest £10bn to invest in tackling leaks and sewage pollution and upgrading networks.

Customer bills are, Bentley was criticised when the Guardian she was due to receive long-term incentive payments worth nearly double her annual salary despite her forgoing her annual bonus. Details of her severance package are expected to be included in next year’s annual report.

Why do Southern Water dump sewage?

We publish our annual flow and spill figures here (last updated March 2023). We want to reduce storm overflow releases, so we have set up a Storm Overflow Taskforce to look at ways to do this. This includes looking at ways to slow the flow of water entering the sewers, making better use of existing infrastructure or building bigger infrastructure to cope with the amount of water.

Why was Southern Water fined?

Southern Water Slammed with Record Fine for Sewage Pollution Today, Southern Water were fined a record £90 million for illegally dumping raw sewage into the sea across the south coast. The company wilfully discharged untreated sewage 7,000 times between 2010- 2015, equating to a massive 61,700 hours of pollution impacting sensitive coastal habitats and popular recreational areas.

Southern Water pleaded guilty to 51 counts of knowingly discharging sewage into the sea. The case brought to light shocking new evidence of their deceit and illegal activity in their attempt to maximise profits. In the biggest ever investigation undertaken by the Environment Agency (EA), it was revealed in court this week that Southern Water locked evidence in cupboards and removed key documents from investigators in an attempt to undermine investigations.

Attempts were also made to prevent EA staff from entering treatment facilities in a blatant move to hide illegal activities. Treatment works were being deliberately run at less than half their capacity with treatment tanks kept full allowing them to turn septic, releasing a highly toxic soup of sewage and rain water straight into the sea.

In one wastewater treatment facility, sheets of boards had even been put into the system to stop sewage water entering into the treatment plant and instead diverted to a storm tank and then dumped straight into the environment. We heard how these discharges were highly likely to have been the reason for contaminated shellfish having been discovered along the south coast which risked causing norovirus to consumers – this is a virus than can be fatal.

The evidence gathered during the investigation showed that this was not the work of a few rogue employees but points towards an institutionalised culture of deceit with instructions and co-ordination coming from the very top of the Southern Water chain of command, including senior lawyers.

And all the while Southern Water customers have been paying escalating bills as the company amassed eye watering sums of profits. Over £200m in profits were made by the company in each of the last 3 years. And, it gets worse! Profits are simply hidden offshore. Southern Water’s Jersey based owners Greensands Holdings, controlled from the Caymans, only payed £100,000 corporation tax on £103m profits.

Yes, our jaws dropped even further at that too! Hugo Tagholm, CEO of Surfers Against Sewage says: It’s absolutely scandalous that Southern Water dumped raw sewage in the sea for so long, hiding their tracks as they went so they could increase their profits.

This shocking, criminal capitalism is one of the worst cases of companies wilfully putting profits before the health of people or planet. Worse still is that water companies, including Southern Water, seem to continue dumping raw sewage into fragile, precious and finite blue habitats, with over 400,000 separate raw sewage pollution events pinned to their collective reputation in 2020 alone.

All whilst their CEOs walk away with huge pay packets and dividends. They are simply not doing a good enough job. The water industry needs to clean up its act and be held to account. This isn’t the first time that Southern Water have been caught out. In 2019, it was ordered to pay a penalty of £126m back to customers by the price regulator Ofwat for deliberately misreporting its performance, serious failures at sewage treatment sites, and for failing to invest in equipment resulting in discharges of waste water into the environment.

  • And last year we reporting in our how Southern Water had failed to provide sewage discharge notifications through the Safer Seas & Rivers Service, putting 1,000’s of people at risk of surfing, swimming, kayaking and playing in potentially unsafe waters.
  • And this won’t be the end of this story.
  • Investigations are still underway for instances occurring after 2015.
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This week’s case highlights the extent to which corporate greed continues to take precedent over human and environmental health. Water companies simply can’t be allowed to get away with this any longer. It’s time to End Sewage Pollution for good.P.S. Our ocean activism is powered by people like you.

What is the toxic water scandal?

Flint water crisis

Time April 25, 2014 – February 1, 2019
Duration 2014–2019
Location Flint, Michigan, United States
Coordinates 43°0′36″N 83°41′24″W  /  43.01000°N 83.69000°W
Type
  • Water contamination:
  • Lead
  • Legionnaires’ disease outbreak
  • Coliform bacteria
  • THMs
Outcome
  • 6,000–12,000 children exposed to lead
  • Public health state of emergency
  • 79 lawsuits
  • Several investigations
  • 4 resignations
  • 4 firings
  • 5 suspensions
  • 15 indicted
  • 1 found guilty
Deaths 12 fatalities
Accused 15 face charges
Convicted 1 – Corinne Miller
Sentence Corinne Miller – a year of probation, 300 hours of community service, and fine of $1,200.

The Flint water crisis was a public health crisis that started in 2014 after the drinking water for the city of Flint, Michigan was contaminated with lead and possibly Legionella bacteria. In April 2014, during a financial crisis, state-appointed emergency manager Darnell Earley changed Flint’s water source from the Detroit Water and Sewerage Department (sourced from Lake Huron and the Detroit River ) to the Flint River,

Residents complained about the taste, smell, and appearance of the water. Officials failed to apply corrosion inhibitors to the water, which resulted in lead from aging pipes leaching into the water supply, exposing around 100,000 residents to elevated lead levels. A pair of scientific studies confirmed that lead contamination was present in the water supply.

The city switched back to the Detroit water system on October 16, 2015. It later signed a 30-year contract with the new Great Lakes Water Authority (GLWA) on November 22, 2017. On January 5, 2016, Michigan Governor Rick Snyder declared a state of emergency in Genesee County, of which Flint is the major population center.

Shortly thereafter, President Barack Obama declared a federal state of emergency, authorizing additional help from the Federal Emergency Management Agency and the Department of Homeland Security, Between 6,000 and 12,000 children were exposed to drinking water with high levels of lead. Children are particularly at risk from the long-term effects of lead poisoning, which can include a reduction in intellectual functioning and IQ, and an increased chance of Alzheimer’s disease,

The water supply change was considered a possible cause of an outbreak of Legionnaires’ disease in the county that killed 12 people and affected another 87, but the original source of the bacteria was never found. Four government officials—one from the city of Flint, two from the Michigan Department of Environmental Quality (MDEQ), and one from the Environmental Protection Agency (EPA)—resigned over the mishandling of the crisis, and one additional MDEQ staff member was fired.

In January 2021, former Michigan Governor Rick Snyder and eight other officials were charged with 34 felony counts and seven misdemeanors—41 counts in all—for their role in the crisis. Two officials were charged with involuntary manslaughter, Fifteen criminal cases have been filed against local and state officials, but only one minor conviction has been obtained, and all other charges have been dismissed or dropped.

On August 20, 2020, the victims of the water crisis were awarded a combined settlement of $600 million, with 80% going to the families of children affected by the crisis. By November, the settlement grew to $641 million. An extensive lead service pipe replacement effort has been underway since 2016.

  1. In early 2017, some officials asserted that the water quality had returned to acceptable levels, but in January 2019, residents and officials expressed doubt about the cleanliness of the water.
  2. There were an estimated 2,500 lead service pipes still in place as of April 2019.
  3. As of December 8, 2020, fewer than 500 service lines still needed to be inspected.

As of July 16, 2021, 27,133 water service lines had been excavated and inspected, resulting in the replacement of 10,059 lead pipes. After $400 million in state and federal spending, Flint has secured a clean water source, distributed filters to all who want them, and laid modern, safe, copper pipes to nearly every home in the city.

Why is Southern Water hard?

How hard is water in my area? – Most of the water we supply is hard, as it comes from underground chalk aquifers with high levels of calcium. We don’t soften water before it reaches your taps – there’s no UK or European standard for the hardness of drinking water.

Soft water contains less than 100mg of calcium carbonate per litre. Moderately hard water contains between 100 and 200mg of calcium carbonate per litre. Hard water contains between 200 and 300mg of calcium carbonate per litre. Very hard water contains more than 300mg of calcium carbonate per litre.

Asked By: Douglas Nelson Date: created: Apr 05 2024

Which water companies have the most debt

Answered By: Harold Simmons Date: created: Apr 07 2024

Thames, debt and water sector finance – Ofwat There has been a huge focus on the finances of water companies over recent weeks. This was prompted by reports, following the departure of its CEO, that Thames Water was in financial difficulty and that the government and regulators were developing plans to handle the fall out.

Anyone following the sector will know Thames Water is a company with deep-rooted problems of persistent poor performance and too much debt. Ofwat has been using its regulatory powers to get the company to focus on fixing those issues – deploying both carrot and stick. We have, for example, taken enforcement action over their failure to reduce leakage, and imposed penalties for not cutting pollution or improving customer service.

We set requirements on Thames to develop investment plans to replace water mains and improve the resilience of their water treatment works. We have introduced new powers so Thames, and all other companies, must link dividends to performance and raised our requirements for financial resilience.

  • The company’s owners and executive are responsible for sorting out the business’ problems and they need to do so with urgency.
  • Thames has reserves of around £4.4bn, so it is a liquid business (excuse the pun), but it needs to develop and execute a turnaround plan.
  • While Thames has been the centre of attention, the broader issue of financial resilience in the industry has been questioned, too.

Has there been too little investment? Is debt a signal of failure? Where has the money gone? There are some big questions for some companies, but let’s look at the facts. At privatisation, it was always intended that the investment required to upgrade water networks would be, at least in part, financed by debt.

  • Just as you borrow to buy a house or a car: so companies borrow to invest in pipes or treatment plants.
  • And there has been huge investment totalling around £190bn of capital expenditure by 2022: about double that of the period before.
  • Just to bring that to life, the current investment programme runs at the equivalent of £27m every single day.

And looking at the value of the companies shows that investment has gone into the system and the water network. The value of the assets– which by their nature depreciate over time – has increased from £9bn to £85bn; while the debt raised over the same period is about £57bn, and the equity is a touch under £20bn.

Put simply, the sector has borrowed to fund new investment. For most companies, debt has been a prudent low-cost source of finance with low interest rates fixed for the long-term. However, some companies borrowed too much, most obviously Thames Water. The risk for this – and for correcting this – belongs to the company and its shareholders.

Looking ahead, the sector faces big challenges that need significant investment – to finance new reservoirs and water transfers, and to cut sewage discharges and nutrient pollution. Companies will need to borrow to make this investment. As they do so, they need to learn the lessons of the past and consider the role of equity as well as debt, to make sure they are resilient financially.

  1. And companies might do well to consider different routes, beyond private investment, including whether funding might be raised publicly through the listed route, or by championing other models, as happened with the Thames Tideway so-called super sewer.
  2. Major investment is needed and companies must fund it without compromising their financial resilience.

We will be keeping company finances under close scrutiny and will exercise our new powers on dividends and financial resilience if companies do not act responsibly. : Thames, debt and water sector finance – Ofwat

Asked By: Austin Gonzalez Date: created: Mar 13 2023

Which water companies are in trouble

Answered By: Donald Green Date: created: Mar 14 2023

8 December 2022 Ofwat has today published its annual assessment of company operational performance and a summary of the financial resilience of companies. Both the Water Company Performance report 2021-22 and the Monitoring Financial Resilience report 2021-22 have identified areas where water companies are letting down their customers, and the environment.

  1. Water company performance report 2021-22 Northumbrian Water, Southern Water, South West Water, Thames Water, Welsh Water and Yorkshire Water have been named as the worst performing companies operationally.
  2. Ofwat required these companies to return almost £120m to customers in November 2022,
  3. Despite some improvements across the industry, Ofwat is deeply concerned by those that are lagging behind expectations and these companies are now required to explain what has led to their poor performance and present a clear action plan to turn this around.
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Ofwat expects to see companies delivering on their commitments to customers. In addition to these improvement plans for specific areas of performance failure, Ofwat will also consider whether poor performance is indicative of any wider compliance issues, which could in turn lead to potential enforcement action if issues are identified.

There is encouraging progress on leakage which is now at its lowest level since privatisation. We expect companies to continue to reduce leakage at pace if the sector is to meet its commitment to reduce leakage by 50% from 2017-8 levels by 2050. The number of serious pollution incidents increased. As a result of poor performance in pollution incidents generally, Ofwat confirmed in November 2022 that companies will have to return almost £17m to customers. In November 2021, we opened an investigation into all wastewater companies in England and Wales, with six enforcement cases against companies where we have the greatest concerns. The majority of companies have seen a drop in their customer satisfaction. Ofwat intends to introduce a condition in all companies’ licences to increase companies’ customer focus and incentivise the very best service for customers. The vast majority of companies missed their target to reduce the level of household water consumption (known as per capita consumption or PCC). Companies should have the strongest possible incentives to deliver reductions in PCC and those that don’t meet their performance commitment levels can expect to incur penalties. All companies met their mains repairs and unplanned outage performance commitment levels. This is an improvement from last year, when 10 companies failed their mains repairs performance commitment level. All companies met their unplanned outage performance commitment levels for the second year in a row.

Monitoring Financial Resilience report 2021-22 Driven by Ofwat intervention, several companies have taken steps to strengthen their financial resilience this year. More than £2billion of new equity has been injected or committed to the regulated companies since March 2021.

This includes proactive intervention from Ofwat over the past 18 months with Thames Water, Southern Water and Yorkshire Water. While these changes are positive, these three companies remain subject to targeted monitoring and engagement. We expect each company to demonstrate delivery of their commitment to improve performance and financial resilience.

In addition to a summary of the sector’s financial resilience, the report notes that most companies have again failed to clearly explain the link between their dividend decisions and payments with performance delivery for customers. In particular, both Northumbrian Water and Portsmouth Water fell short of our expectations when considered in the context of the level of dividend they paid, which was significantly higher than our base expectations, and their relative financial resilience.

As a result, we will require all companies that are not meeting our expectations to set out the actions they are taking to address our concerns. In parallel we are seeking to change the licences of all companies to strengthen financial resilience and ensure dividend payments take into account performance for customers in line with our expectations.

David Black, CEO said: “In too many areas, water and wastewater companies are falling short when it comes to looking after customers, the environment and their own financial resilience. We are clear; these companies need to address this unacceptable performance as a matter of urgency.

A summary of our final in period determinations for 2021-22 can be read here, The Water Company Performance Report was formerly known as the Service and Delivery Report. Monitoring Financial Resilience Report 2021-22 More information on leakage can be found here,

Does Macquarie own Southern Water?

Southern Water owner Macquarie invests further £550m

The Australian infrastructure investor Macquarie has confirmed it will inject a further £550m into the UK’s Southern in an attempt to turn around the troubled company.The funds are intended to help Southern Water, which supplies Kent, Sussex, Hampshire and the Isle of Wight, to overhaul its leaky pipes and faulty sewage works.Macquarie’s investment, which it first indicated it would make last month, extends its ownership of Southern Water, after it,

Martin Bradley, Macquarie’s head of infrastructure in the EMEA region, said: “When we invested in Southern Water in 2021, we said its operational transformation would take time. Whilst the company is making good initial progress, maintaining this momentum depends on significant and sustained investment in its infrastructure.” Macquarie promised in 2021 to put the company “back on a stable footing” after it was fined a record £90m for deliberately off the north Kent and Hampshire coasts.

  • But last year Southern after discharging raw sewage for more than 3,700 hours at 83 bathing water beaches during the first eight days of November alone.
  • Macquarie’s decision to take a stake in Southern marked a return to the water industry for the investment bank, which had left Thames Water saddled with debt when it sold its stake in 2017.

Macquarie, in which the company paid out billions in dividends but paid next to no corporation tax. Thames Water last month secured £750m of emergency funding from its shareholders and said it would need further funds in the years ahead. It had emerged that officials were,

In August 2021, Macquarie made a £1bn equity injection into Southern, putting more than £500m into the regulated company. It used the remainder to reduce leverage at Southern’s holding companies in a deal that diluted existing shareholders and was closely scrutinised by the water industry regulator, Ofwat.

Ofwat wrote to Macquarie after the investment, stating that “very profound changes” would be required at the company, which supplies water to 2.6 million customers, and provides wastewater services to 4.7 million customers. Bradley said: “Instead of reducing our ambitions in the face of higher cost inflation and interest rates, we are backing Southern Water with additional equity, enabling it to invest circa £1bn more than the funding it received via the regulatory framework for the period.” Bradley said the investment needed for Southern Water to achieve its ambitions would depend on “important decisions by its regulators.

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after newsletter promotion “With rainwater runoff from highways and urban areas into the sewer network causing around 98% of all pollution events in the Southern Water area, we also need a broader conversation on how we progress long-term solutions that relieve pressure on the UK’s legacy storm overflow system,” Bradley added.

  • This year, Macquarie announced a record annual net profit of A$5.18bn (£2.8bn) for 2022, up 10% on the previous year, thanks in part to its commodity trading interests.
  • Its top commodity trader, Nick O’Kane, earned A$58m through a profit-share agreement, up from A$36m the year before.
  • O’Kane’s earnings outstripped even the group’s chief executive, Shemara Wikramanayake, who made A$33m, still putting her ahead of some of Wall Street’s best-paid bankers.

Southern Water’s shareholders have not received dividends from the company since September 2017. : Southern Water owner Macquarie invests further £550m

Asked By: Jason Evans Date: created: Nov 08 2023

When did Macquarie sell Thames Water

Answered By: Austin Peterson Date: created: Nov 08 2023

Thames debts – Thames Water is now the most indebted water company rated by Standard & Poor’s, with leverage exceeding 80%, most of which accrued under Macquarie’s tenure. More than half the company’s debt is inflation-linked, as at the end of last year, which does not bode well for this current period of escalating costs.

  1. Critics point to the privatisation of the UK water industry more than three decades ago, which was supposed to usher in a new era of investment, more competitive bills and improved water quality, as the source of the problem.
  2. Groups such as the Macquarie consortium came in and used securitisation models – which allow the owners to unlock more financing – to raise the debt-to-equity ratio to levels unanticipated at privatisation.
  3. “From what I can see it seems that this is absolutely the root of the problem,” says Kate Bayliss, of the economics department at Soas, University of London.
  4. “We had such a naive and benign perspective of what we thought the private sector would do when the regulations were conceptualised Financial wizardry is seen as a good thing, but it’s impenetrable, near impossible to understand the structures from the outside.”

Macquarie sold its final stake in Thames in 2017, the same year it snapped up the government’s Green Investment Bank for £2.3bn, Its exit from Thames Water proved to be well timed. Days after the sale was announced in March 2017, the utility was hit with linked to huge leaks of untreated sewage for offences in 2013 and 2014.

  1. A judge as “wicked”, while noting a “continual failure to report incidents” and “history of non-compliance”.
  2. In the ensuing years the leaks at Thames Water have continued, its financial position has worsened and political pressure has increased.
  3. They had impeccable timing,” says Bayliss.
  4. They are very good at what they do.” Macquarie was then allowed to wade back into the UK water industry in 2021,,

But, five years on, its links to Thames are still apparent. After Bentley’s departure, existing directors Alastair Cochran and Cathryn Ross were hastily promoted to become joint chief executives. Not only is Ross, which scrutinised Thames’ financial position, but since 2019 she has also held a directorship on the board of National Gas Transmission, the £7.5bn gas network and metering business bought by a consortium led by Macquarie from National Grid last year.